The Kuvlum quandary.

• Author: Tyson, Ray
• Position: Oil exploration

If it's not a pot of black gold, does this North Slope oilpatch have enough petroleum to offer "pearl" potential?

Though Arco Alaska's Kuvlum and Wild Weasel prospects in the Beaufort Sea proved to be commercial duds, industry observers here don't expect the bad news to derail anyone's exploration plans for the undeveloped eastern North Slope region.

Moreover, Arco's misfortune at Kuvlum and Wild Weasel isn't the final word on the area's commercial viability, mainly because of the many tantalizing oil prospects still remaining in the area.

"We continue to believe that the exploration prospects in Alaska are as good as anywhere in the world," declares Arco spokesman Ronnie Chappell. "We believe that the eastern Beaufort still holds the potential for a commercial success. We would have liked to have had a commercial discovery at Kuvlum. Even so, we've learned a lot from the wells, and we're still learning."

However, it may be some time before oil companies venture far into the Beaufort Sea, an inhospitable corner of the world that has been unkind to explorers in the past. In fact, Alaska's outer continental shelf has yet to provide a commercial discovery. Of the more than 90 exploratory wells drilled in federal waters, Kuvlum represented the best hope.

Arco, the operator, and partners Union Texas Petroleum, Phillips Petroleum, Total Minatome, Murphy Oil and Mobil announced the Kuvlum discovery in October 1992. At a flow rate of 3,400 barrels a day, Kuvlum represented the largest oil strike ever on Alaska's outer continental shelf.

While the Kuvlum No. 2 and Kuvlum No. 3 delineation wells, drilled last summer to depths ranging from 8,000 feet to 11,125 feet, indicated there was a large accumulation of hydrocarbons present, Arco concluded it was not large enough to justify the high cost of a stand-alone development in such a remote area of the Arctic.

Not only is Kuvlum miles from shore, but it is located beneath a sea that is frozen most of the year, requiring engineering techniques never used before in the Arctic. Kuvlum also is located miles from the North Slope's production nerve center and the trans-Alaska oil pipeline.

Arco says it will spend the winter reviewing drilling data and engineering studies before deciding whether to do more work on Kuvlum, a project which already has cost Arco and its partners some $100 million. Meanwhile, Arco moved six miles south to drill the Wild Weasel prospect, rekindling hope for another large oil...